UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported):                March 16, 2015                        

THE TIMKEN COMPANY

 

(Exact Name of Registrant as Specified in its Charter)

 

Ohio

 

(State or Other Jurisdiction of Incorporation)

 

1-1169

34-0577130

(Commission File Number) (IRS Employer Identification No.)

4500 Mount Pleasant St. N.W., North Canton, Ohio 44720-5450

(Address of Principal Executive Offices)           (Zip Code)

 

(234) 262-3000

 

(Registrant’s telephone number, including area code)

 

 

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01     Regulation FD Disclosure

   On March 17, 2015, The Timken Company (the “Company”) will present at the Bank of America Merrill Lynch Global Industrials & EU Autos Investor Conference. A live webcast of the presentation and a copy of the investor presentation slides will be available on the Company’s website, www.timken.com/investors, until March 31, 2015. The investor presentation slides are attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by this reference.

   This information shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01     Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.

Description

    99.1 Investor Presentation Slides dated March 17, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

THE TIMKEN COMPANY
By: 

/s/ William R. Burkhart

William R. Burkhart

Executive Vice President, General Counsel and Secretary

Date: March 16, 2015

EXHIBIT INDEX

 

Exhibit No.

Description

    99.1 Investor Presentation Slides dated March 17, 2015.


Bank of America Merrill Lynch Investor Conference
March 17, 2015 •
London
Exhibit 99.1

2
Certain
statements
in
this
presentation
(including
statements
regarding
the
company's
forecasts,
beliefs,
estimates
and
expectations)
that
are
not
historical
in
nature
are
"forward-looking"
statements
within
the
meaning
of
the
Private
Securities
Litigation
Reform
Act
of
1995.
In
particular,
the
statements
related
to
Timken’s
plans,
outlook,
future
financial
performance,
targets,
projected
sales,
cash
flows,
liquidity
and
expectations
regarding
the
future
financial
performance
of
the
company,
including
the
information
under
the
headings
“The
Timken
Business
Model”,
“The
Growth
Plan:
What
You
Can
Expect”,
“2014
Actions
Drive
Strong
Performance
&
Opportunity”,
“Balance
Sheet
and
Leverage”,
“Impact
of
Currency
on
2015
Outlook”,
and
“Investment
Summary -
Why
Own
Timken”
are
forward-looking.
The
company
cautions
that
actual
results
may
differ
materially
from
those
projected
or
implied
in
forward-looking
statements
due
to
a
variety
of
important
factors,
including:
the
company’s
ability
to
respond
to
the
changes
in
its
end
markets
that
could
affect
demand
for
the
company’s
products;
unanticipated
changes
in
business
relationships
with
customers
or
their
purchases
from
the
company;
changes
in
the
financial
health
of
the
company’s
customers,
which
may
have
an
impact
on
the
company’s
revenues,
earnings
and
impairment
charges;
fluctuations
in
raw-material
and
energy
costs;
the
impact
of
the
company’s
last-in,
first-out
accounting;
weakness
in
global
or
regional
economic
conditions
and
financial
markets;
changes
in
the
expected
costs
associated
with
product
warranty
claims;
the
ability
to
integrate
acquired
companies
to
achieve
satisfactory
operating
results;
the
impact
on
operations
of
general
economic
conditions;
fluctuations
in
customer
demand;
the
impact
on
the
company’s
pension
obligations
due
to
changes
in
interest
rates,
mortality
assumptions
or
investment
performance,
the
company’s
ability
to
complete
and
achieve
the
benefits
of
its
announced
plans,
programs,
initiatives
and
capital
investments;
the
taxable
nature
of
the
spinoff;
and
the
company’s
ability
to
realize
the
potential
benefits
of
the
spinoff
of
the
steel
business
and
avoid
possible
indemnification
liabilities
under
certain
agreements
it
entered
into
with
TimkenSteel
Corporation
in
connection
with
the
spinoff.
Additional
factors
are
discussed
in
the
company’s
filings
with
the
Securities
and
Exchange
Commission,
including
the
company’s
annual
report
on
Form
10-K
for
the
year
ended
Dec.
31,
2014,
quarterly
reports
on
Form
10-Q
and
current
reports
on
Form
8-K.
Except
as
required
by
the
federal
securities
laws,
the
company
undertakes
no
obligation
to
publicly
update
or
revise
any
forward-looking
statement,
whether
as
a
result
of
new
information, future
events
or
otherwise.
This
presentation
includes
certain
non-GAAP
financial
measures
as
defined
by
the
rules
and
regulations
of
the
Securities
and
Exchange
Commission.
Reconciliation
of
those
measures
to
the
most
directly
comparable
GAAP
equivalents
are
provided
in
the
Appendix
to
this
presentation.
FORWARD-LOOKING STATEMENTS

Company Overview and Direction
*
*
*
*

4
A Proud History and A Compelling Future
A Leader in Bearings, Power Transmission and Related Services
Ticker
Legacy
2014 Sales
Employees
Global Footprint
Dividend
NYSE: TKR
c. 1899; 115 years of operations
$3.1B
16,000 worldwide
Headquarters in North Canton, OH
28 countries
62 manufacturing facilities
Payout every quarter since IPO in
1922
TIMKEN
AT
A
GLANCE

5
The Timken Transformation 2007 -
2014
•
Exited automotive business that did not
meet value proposition criteria
–
$1B exited and business restructured
–
Completed in December 2013
•
Built capabilities to win in the marketplace
–
Global ERP system
–
Global footprint expansion
–
Product expansion
–
Service capabilities
•
Company-wide operational excellence
initiative
•
TimkenSteel spinoff
•
Aerospace restructure
•
Pension plans fully funded; derisking
underway
2007
2014
See Appendix for reconciliation of adjusted EBIT margin to its most directly comparable GAAP equivalent.
(1) Total Shareholder Return for the Company takes into account the value of TimkenSteel common shares distributed in the Spinoff on
June 30, 2014 and assumes quarterly reinvestment of dividends.
2004 –
2008
2010 –
2014
Sales:
EBIT Margin (Adj.):
$3.7B
5.0%
$3.1B
12.6%
5-Year Average
(5-Year Annualized, ending 12/31/14)
Timken Improved Financial Performance
Total
Shareholder
Return
(1)
TIMKEN
TRANSFORMATION

6
Driving a More Balanced and Profitable Portfolio of Businesses
End-Market Sectors
Product Offering
Channel Overview
OEM
(Aftermarket Parts)
OEM
(New
Equipment
Builds)
Aftermarket
•
Highly diverse end-
market sectors, customer
base and applications
•
Attractive business mix
•
Expanding beyond
tapered roller bearings
•
Power transmission and
services diversification
•
Reflects new products,
acquisitions and global
expansion
•
Large installed base
drives aftermarket
–
Lifetime of revenue
–
Higher margin mix
•
1/3 of OEM business is
OEM service
Note: Based on 2014 sales of $3.1B.
Bearings
Services
Power Transmission
Products
19%
15%
ATTRACTIVE BUSINESS PROFILE

Technology &
Know How
Business
Capabilities
Operational
Excellence
Talent
Growth Markets Driven
by Strong Macros
Expand Global Reach with
Adjacent Products &
Services
Value
Creation
Challenging
Applications
Aftermarket
& Rebuild
Fragmentation
High Service
Requirements
7
THE TIMKEN BUSINESS MODEL

8
Capture Share
and
Market Growth
Apply Timken Business Model
Win Globally
Grow International Sales and
Focus on Emerging Markets
Leverage
Technology and
Know-How to
Grow Organically
Accelerate Product Development Rate
Pursue Strategic,
Bolt-on
Acquisitions
Focus on:
Bearings | International | Services
Power Transmission Adjacencies
1.
2.
3.
4.
THE GROWTH PLAN: WHAT YOU CAN EXPECT

February
2010
July
2010
February
2013
Type E
Ball bearing
housed units
Split roller housed
units
July
2014
November
2014
9
Spherical roller
bearing steel
housed unit
Feb
2003
SNT Plummer
UC Series
Ball Bearing
•
Housed bearing units provide enhanced bearing protection in a
multitude of harsh conditions. Timken housed units feature robust
sealing options –
enhancing bearing protection in debris-filled,
contaminated or high-moisture environments.
BEARING HOUSED UNIT PORTFOLIO TRANSFORMATION
BUILDING FOR GROWTH
TIMKEN NOW MARKETS AMONG THE BROADEST RANGE OF
BEARING HOUSED UNITS IN THE INDUSTRY

10
•
Successful organization in place and TimkenSteel spin completed
•
2014 earnings growth (adj. EPS) of 23% on modest top line growth
•
Launched multiple growth opportunities & margin enhancement
initiatives
–
DeltaX
–
Disciplined and strategic M&A --Schulz and Revolvo
–
Aerospace restructuring
–
Operational
excellence
•
Pension de-risking
•
Returned capital to shareholders through dividends and increased
level
of share repurchases in 2014
See appendix for reconciliation of adjusted EPS to its most directly comparable GAAP equivalent.
2014 ACTIONS DRIVE STRONG PERFORMANCE & OPPORTUNITY

Financial Review
*
*
*
*

12
Execution of Timken Business Model Drives Success
Revenue
Adj. EBIT Margin
Adj. EPS
Up 6% excluding planned
program exits in Mobile
Industries and currency
$3.0
$3.1
10.8%
12.2%
$2.07
$2.55
Improvement driven by operational excellence
initiatives and cost reduction;
EPS increase includes share repurchases
($ in Billions)
Up 1%
Up 140 bps
Up 23%
See appendix for reconciliations of adjusted sales, adjusted EBIT Margin, adjusted EPS and adjusted ROIC to their
most directly comparable GAAP equivalents.
Other Highlights:
•
Process Industries
sales up 10.4% vs.
2013
•
SG&A expense
improved 40 bps
(% of sales) vs.
2013
•
Adjusted ROIC of
11.5%, up from
9.7% in 2013 (cost
of capital ~9%)
2014 FINANCIAL ACCOMPLISHMENTS

13
See Appendix for reconciliations of Net Debt/Capital and adjusted EPS to their most directly comparable GAAP equivalents.
Balance Sheet Presents Value-Creation Opportunity
Capital Structure
Cash
$294
Debt
530
Net Debt
236
Equity
1,589
Net Capital
$1,825
Leverage
Total Debt/Capital
25%
Net Debt/Capital
13%
($ Millions)
Balance Sheet (12/31/14)
Target:
30 –
40%
Net Debt
Net Debt/ Capital
($ Millions)
Net Debt / Capital
2014 Actual
9%
2%
13%
Capital
Expenditures
Dividend
Share Repurchases
Acquisitions
Executing Plan:
2015 Outlook
–
Target CapEx at ~4% of sales
–
Expect
to
remain
at
or
above
top-end
of  
25
–
35%
targeted
payout
ratio
–
Continued focus on pipeline of attractive M&A
targets aligned with criteria
–
Remaining share repurchase authorization of
8.9M shares; expires 12/31/15
–
Invested $127M in CapEx (4.1% of sales), including
growth initiatives
–
Paid dividends totaling $1.00 per share; 39% payout
ratio (on Adj. EPS of $2.55)
–
Completed acquisitions of Schulz Group and Revolvo
Ltd. ($22 million spend)
–
Repurchased 5.2M shares for $271 million (6% of
outstanding as of 12/31/13)
BALANCE SHEET AND LEVERAGE

14
US dollar index (DXY)
90.3
100.2
USD/EUR
1.21
1.05
Est. full year revenue impact          down 3%*
down 6%
January 1
March 13
Currency Impact on 2015 (vs. 2014):
* Included in original outlook provided on January 29
Appreciation in US dollar since year-end driving larger
adverse impact on 2015 revenue versus prior year
Over 45% of Timken 2014 revenue was generated
outside the United States:
IMPACT OF
CURRENCY ON 2015 OUTLOOK

15
•
Differentiated Business Model delivers strong financial results
–
Fragmented, diverse end-markets and customers
–
Attractive mix
–
Global growth opportunity
•
Strong, results oriented Management Team
•
Shifted focus from transformation to:
–
Growth
–
Margin performance
–
Capital allocation; improved FCF generation leads to increased return of
capital and funding of growth
…Prepared to Deliver Strong Shareholder Value
Timken is a Compelling Investment…
INVESTMENT SUMMARY – WHY OWN TIMKEN

Bank of America Merrill Lynch Investor Conference
March 17, 2015 •
London
*
*
*
*

Appendix
*
*
*
*

18
Reconciliation of Sales, EBIT to Net Income, EBIT After Adjustments to Net Income , EBIT as a Percentage of Sales
and EBIT After Adjustments as a Percentage of Sales; all excluding the Steel Business:
The following reconciliation is provided as additional relevant information about the Company's performance.  Management
believes that EBIT and EBIT margin, after adjustments, are representative of the Company's core operations and therefore
useful to investors.
(Dollars in millions)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Net sales (as reported)
4,513.7
$  
5,168.4
$  
4,973.4
$  
5,236.0
$  
5,663.7
$  
3,548.4
$  
4,055.5
$  
5,170.2
$  
Net sales attributable to TimkenSteel
1,221.7
    
1,582.2
    
1,327.8
    
1,415.1
    
1,694.0
    
672.9
        
1,256.9
    
1,836.6
    
Net sales - The Timken Company (pro forma)
3,292.0
$  
3,586.3
$  
3,645.5
$  
3,820.9
$  
3,969.7
$  
2,875.4
$  
2,798.6
$  
3,333.6
$  
3,359.5
$  
3,035.4
$  
3,076.2
$     
5 Year Average Net sales: Year Ending (2004-2008)
3,662.9
$  
5 Year Average Net sales: Year Ending (2010-2014)
3,120.7
$     
Net Income (as reported)
135.7
$      
260.3
$      
176.4
$      
219.4
$      
267.7
$      
(138.6)
$    
269.5
$      
456.6
$      
495.9
$      
263.0
$      
173.3
$         
Income from Discontinued Operations, net of income taxes
(164.4)
      
(87.5)
         
(24.0)
            
Provision for income taxes
64.1
          
130.3
        
77.8
          
62.9
          
157.9
        
1.5
             
136.0
        
240.2
        
186.3
        
114.6
        
54.7
             
Gain (loss) on divesiture
(19.9)
         
Interest expense
49.4
          
48.1
          
44.8
          
35.6
          
39.0
          
40.2
          
38.2
          
36.8
          
31.1
          
24.4
          
28.7
             
Interest income
-
               
-
               
-
               
-
               
-
               
-
               
(3.7)
           
(5.6)
           
(2.9)
           
(1.9)
           
(4.4)
              
Consolidated earnings before interest and taxes (EBIT)
249.2
$      
438.7
$      
299.0
$      
317.9
$      
464.6
$      
(116.9)
$    
440.0
$      
728.0
$      
546.0
$      
312.6
$      
228.3
$         
EBIT attributable to TimkenSteel
54.8
          
219.8
        
206.7
        
213.1
        
264.0
        
(57.9)
         
146.1
        
265.3
        
-
                   
EBIT - The Timken Company
194.5
$      
218.9
$      
92.3
$        
104.8
$      
200.6
$      
(59.0)
$      
293.9
$      
462.7
$      
546.0
$      
312.6
$      
228.3
$         
EBIT - The Timken Company (pro forma) % to Net Sales
5.9%
6.1%
2.5%
2.7%
5.1%
-2.1%
10.5%
13.9%
16.3%
10.3%
7.4%
Adjustments:
    Gain on sale of real estate in Brazil
(5.4)
           
(22.6)
            
    Cost-reduction initiatives and plant rationalization costs
27.0
          
17.3
          
24.4
          
34.5
          
5.8
             
11.1
          
28.0
          
22.0
          
37.1
          
14.8
          
14.6
             
    Loss on divestitures
64.3
          
0.5
             
(0.0)
           
19.9
          
    Impairment and restructuring
13.4
          
26.1
          
44.9
          
40.4
          
64.4
          
216.7
        
121.6
           
    Pension settlement charges
7.2
33.7
    Other Special Items, including CDSOA expense (receipts)
(43.0)
         
(85.4)
         
(94.7)
         
(13.2)
         
(29.3)
         
2.0
             
(2.3)
           
(2.4)
           
(108.0)
      
        Total Adjustments
(2.5)
$         
(42.1)
$      
38.9
$        
62.2
$        
40.8
$        
249.7
$      
25.7
$        
19.6
$        
(70.9)
$      
16.6
$        
147.3
$         
Adjusted EBIT - The Timken Company (pro forma)
192.0
$      
176.9
$      
131.2
$      
167.0
$      
241.4
$      
190.8
$      
319.6
$      
482.3
$      
475.1
$      
329.2
$      
375.6
$         
Adjusted EBIT - The Timken Company (pro forma) % to Net Sales
5.8%
4.9%
3.6%
4.4%
6.1%
6.6%
11.4%
14.5%
14.1%
10.8%
12.2%
5 Year Average Adjusted EBIT Margin: Year Ending (2004-2008)
5.0%
5 Year Average Adjusted EBIT Margin: Year Ending (2010-2014)
12.6%
Twelve Months Ended December 31,
:
2004 – 2014
GAAP RECONCILIATION

19
The Timken Company
(Dollars in millions) (Unaudited)
2014
2013
Net Sales
3,076.2
$       
3,035.4
$       
     Less:  Planned Program Exits
110.0
             
     Add back:  Currency impact
(30.4)
              
Total
3,216.6
$       
3,035.4
$       
Year-over-Year change
181.2
$          
6.0%
Reconciliation of Net Sales After Planned Program Exits and Currency Effects to Net Sales
The following reconciliation is provided as additional relevant information about the Company's performance.  Management
believes that net sales, after planned program exits and currency effects, are representative of the Company's continuing
operations and therefore useful to investors. 
Twelve Months Ended
December 31,
GAAP RECONCILIATION
EXITS & CURRENCY EFFECTS
: SALES EXCLUDING PLANNED PROGRAM 

20
(Dollars in millions, except share data)  (Unaudited)
2014
Percentage
to
Net Sales
2013
Percentage
to
Net Sales
Net Income
173.3
$       
5.6
%
263.0
$       
8.7
%
Income From Discontinued Operations, net of income taxes
(24.0)
(0.8)%
(87.5)
(2.9)%
Provision for income taxes
54.7
1.8
%
114.6
3.8
%
Interest expense
28.7
0.9
%
24.4
0.8
%
Interest income
(4.4)
(0.1)%
(1.9)
(0.1)%
Consolidated earnings before interest and taxes (EBIT)
228.3
$       
7.4
%
312.6
$       
10.3
%
Adjustments:
Gain on sale of real estate in Brazil
(1)
(22.6)
(0.7)%
(5.4)
(0.2)%
Charges for cost-reduction initiatives and plant rationalization costs
(2)
14.6
0.5
%
14.8
0.5
%
Aerospace impairment and restructuring charges
(3)
121.6
4.0
%
—
—%
Pension settlement charges
(4)
33.7
1.1
%
7.2
0.2
%
Total Adjustments
147.3
4.8
%
16.6
0.5
%
Consolidated earnings before interest and taxes (EBIT), after
adjustments
375.6
$       
12.2
%
329.2
$       
10.8
%
(4)
Pension settlement charges related to the settlement of certain U.S. pension obligations.
December 31,
(1)
Gain on the sale of real estate relates to the sale of the former
(2)
Cost-reduction
initiatives
and
plant
rationalization
costs
related
to
plant
closures,
the
rationalization
of
certain
plants,
and
(3)
Aerospace impairment and restructuring charges related to goodwill impairment charges, inventory valuation adjustments,
Reconciliation of EBIT Margin, After Adjustments, to Net Income as a Percentage of Sales and EBIT, After Adjustments, to
Net Income:
The following reconciliation is provided as additional relevant information about the Company's performance.  Management
believes that EBIT and EBIT margin, after adjustments, are representative of the Company's core operations and therefore
useful to investors.
Twelve Months Ended
GAAP RECONCILIATION
: CONSOLIDATED EBIT & EBIT MARGIN

21
Reconciliation of Adjusted Return on Invested Capital (ROIC):
The following reconciliation is provided as additional relevant information about the Company's performance.  Management
believes that ROIC, after adjustments, is representative of financial return of the Company's core operations and therefore
useful to investors.  The Company uses NOPAT/Average Invested Capital as a type of ratio that indicates return on invested
capital.
Reconciliation of Adjusted EBIT
2014
2013
Income from continuing operations, net of income taxes
149.3
$                 
175.5
$          
Provision for income taxes
54.7
                     
114.6
            
Interest expense
28.7
                     
24.4
               
Interest income
(4.4)
                      
(1.9)
               
Earnings Before Interest and Taxes (EBIT) (As Reported)
228.3
                   
312.6
            
Gain on sale of real estate in Brazil
(22.6)
                    
(5.4)
               
Charges for cost-reduction initiatives and plant rationalization costs
14.6
                     
14.8
               
Aerospace impairment and restructuring charges
121.6
                   
-
                  
Pension settlement costs
33.7
                     
7.2
                  
  Adjusted EBIT
375.6
$                 
329.2
$          
Reconciliation of Net Operating Profit after Taxes
2014
2013
Adjusted EBIT
375.6
$                 
329.2
$          
Tax Rate
33.0%
35.1%
Calculated Income Taxes
123.9
                   
115.7
            
  Net operating profit after taxes
251.7
                   
213.5
            
Reconciliation of Adjusted Invested Capital
2014
2013
2012
Total debt
530.1
                   
445.7
          
448.8
          
Total equity
1,589.1
              
2,648.6
       
2,246.6
       
Equity related to discontinued operations
-
                       
826.7
          
549.2
          
Adjusted total equity
1,589.1
              
1,821.9
       
1,697.4
       
Adjusted invested capital (Total debt + Adjusted total equity)
2,119.2
              
2,267.6
       
2,146.2
       
  Adjusted invested capital (two-point average)
2,193.4
              
2,206.9
       
Calculation of Adjusted Return on Invested Capital
2014
2013
Net operating profit after taxes (NOPAT)
251.7
$                 
213.5
$        
Adjusted invested capital (two-point average)
2,193.4
              
2,206.9
       
  Return on invested capital
11.5%
9.7%
GAAP RECONCILIATION: ADJUSTED ROIC

22
Reconciliation of Net Debt to Total Debt and the Ratio of Net Debt to Capital:
This reconciliation is provided as additional relevant information about the Company's financial position.  Capital,
used
for
the
ratio
of
total
debt
to
capital,
is
defined
as
total
debt
plus
total
shareholders'
equity.
Capital,
used
for
the ratio of net debt to capital, is defined as total debt less cash and cash equivalents plus total shareholders'
equity.
Management
believes
Net
Debt
is
an
important
measure
of
the
Company's
financial
position,
due
to
the
amount of cash and cash equivalents.
(Dollars in millions)
June 30,
2014
December 31,
2014
December 31,
2013
Short-term debt
314.6
$                        
8.0
$                            
269.3
$                       
Long-term debt
176.2
522.1
176.4
     Total Debt
(1)
490.8
$                        
530.1
$                        
445.7
$                       
Less: Cash, cash equivalents and restricted cash
(310.1)
(294.1)
(399.7)
     Net Debt
(1)
180.7
$                        
236.0
$                        
46.0
$                         
Total equity
1,804.1
$                    
1,589.1
$                    
2,648.6
$                    
Ratio of Total Debt to Capital
21.4
%
25.0
%
14.4
%
Ratio of Net Debt to Capital
9.1
%
12.9
%
1.7
%
(1) Total Debt and Net Debt at December 31, 2013 excludes $30.2 million of debt transferred to TimkenSteel and is considered discontinued operations. 
GAAP RECONCILIATION: NET DEBT / CAPITAL

23
Reconciliation of Earnings Per Share and Earnings Per Share After Adjustments to Net Income;
excluding the Steel Business:
The following reconciliation is provided as additional relevant information about the Company's performance. 
Management believes that earnings per share (EPS), after adjustments, are representative of the Company's core
operations and therefore useful to investors.
2013
2014
Reported EPS
1.82
$           
1.61
$     
Adjustments:
    EPS Attributable to TimkenSteel
-
          
    Gain on sale of real estate in Brazil
(0.06)
            
(0.25)
      
    Cost-reduction initiatives and plant rationalization costs
0.15
              
0.16
        
    Impairment and restructuring
1.33
        
    Special items - other (income) expense
    Tax impact of discrete items
    CDSOA expense (receipts)
-
          
    Pension settlement charges
0.08
              
0.37
        
    Provision for income taxes
0.07
              
(0.68)
      
        Total Adjustments
0.24
$           
0.94
$     
EPS - The Timken Company, after adjustments (pro forma)
2.07
$           
2.55
$     
Twelve Months Ended
GAAP RECONCILIATION: PRO FORMA EPS

24
Reconciliation of EBIT After Adjustments and EBIT as a Percentage of Sales:
The following reconciliation is provided as additional relevant information about the Company's performance. 
Management believes that EBIT and EBIT margin, after adjustments, are representative of the Company's core
operations and therefore useful to investors.
Mobile Industries
(Dollars in millions) (Unaudited)
Twelve
Months Ended                
December 31,
2014
Percentage
to Net Sales
Earnings before interest and taxes (EBIT)
65.6
$              
3.9%
Gain on sale of real estate in Brazil
(1)
(22.6)
(1.3)%
Charges for cost-reduction initiatives and plant rationalization costs
(2)
11.8
0.7
%
Aerospace impairment and restructuring charges
(3)
121.6
7.2
%
Pension settlement charges
(4)
0.7
—%
Earnings before interest and taxes (EBIT), after adjustments
177.1
$           
10.5%
Process Industries
(Dollars in millions) (Unaudited)
Twelve
Months Ended                
December 31,
2014
Percentage
to Net Sales
Earnings before interest and taxes (EBIT)
267.1
$           
19.2%
Charges for cost-reduction initiatives and plant rationalization costs
(2)
2.2
0.2%
Earnings before interest and taxes (EBIT), after adjustments
269.3
$           
19.4%
(2)
Cost-reduction
initiatives
and
plant
rationalization
costs
related
to
plant
closures,
the
rationalization
of
certain
plants,
and
severance
related
to
cost
reduction
initiatives. 
(1)
Gain on the sale of real estate relates to the sale of the former manufacturing facility in Sao Paulo, Brazil.
(3)
Aerospace impairment and restructuring charges related to goodwill impairment charges, inventory valuation adjustments, and severance.  
(4)
Pension settlement charges related to the settlement of certain U.S. pension obligations. 
GAAP RECONCILIATION: SEGMENT ADJUSTED EBIT
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